Damages under the IP Enforcement Directive a decade on - Spain

The Spanish Supreme Court has referred questions to the CJEU as to the interpretation to be adopted of Article 13(1)(b) of the IP Enforcement Directive as implemented by Article 140(2)(b) of the Spanish Copyright Act. The questions concern whether it is possible to claim damages for moral prejudice suffered by the author as set out in part 13(1)(a) of the Directive as well as calculating the damages by way of application of the alternative mechanism set out in Article 13(1)(b) of the Directive (Article 140(2)(b) of the Spanish Copyright Act). Article 13(1) of the Directive states as follows:

The Supreme Court goes on to emphasise the controversial nature of the debate by referral to other Member States whose implementing national laws allow them to combine Article 13(1)(b) with (a) and the separate claim for moral prejudice.
Finally, it should be noted that the Spanish courts’ interpretation on the matter has rather leant towards considering Article 13(1)(b) as a full alternative to Article 13(1)(a). Moral prejudice has usually been considered as a complement to the heads of damage set out in Article 13(1)(a).

Member States shall ensure that the competent judicial authorities, on application of the injured party, order the infringer who knowingly, or with reasonable grounds to know, engaged in an infringing activity, to pay the rightholder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement.

When the judicial authorities set the damages:

(a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to

the rightholder by the infringement;

or

(b) as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

Facts of the dispute

• The claimant, Mr. Christian Liffers filed an appeal against the judgment of the Madrid Court of Appeal under which he was denied the damages previously granted by the Madrid Commercial Court No.6. Mr. Liffers claimed the unauthorised use of his work by Producciones Mandarina, S.L. and Gestevision Telecinco, S.A.
• The claimant alleged that, these companies incorporated relevant parts of the audio-visual work created by Mr. Liffers and titled “Dos patrias, Cuba y la noche” in a TV documentary broadcast on Telecinco TV channel. The claimant preliminarily asked for € 6,740 for the infringement of his exploitation rights on the work and € 10,000 as indemnification for the moral prejudice suffered by him.
• In order to calculate damages for the infringement of exploitation rights, the claimant chooses the mechanism established in Article 140(2)(b) of the Spanish Copyright Act, which provides for calculation based on a hypothetical license that the infringers could have requested.

Questions referred by Spanish Supreme Court:

The Supreme Court proposes three different options for interpretation of Article 13(1)(b):

• The Supreme Court proposes three different options for interpretation of Article 13(1)(b):• Article 13(1)(b) must be understood as an alternative to Article 13(1)(a) of the Directive. The Supreme Court bases this option on a literal interpretation of the language of the implementing law, since it includes compensation for moral prejudice in Article 140(2)(a), concluding that the use of the alternative must be understood as precluding the possibility of claiming moral prejudice as well as damages derived from the infringement of the exploitation rights of the work.
• Article 13(1)(b) must be understood as being compatible with a claim for damages for moral prejudice. Here the Supreme Court elaborates on the possibility that Article 13(1)(b) is understood restrictively as an alternative to the compensatory criteria relating to economic damages provided for in Article 13(1)(a) Thus, the alternative character of both calculation methods would not affect the right to claim for moral prejudice, compensation for which would be added to the compensation awarded under Article 13(1)(b). This interpretation would be justified given the difficulties in calculating the indemnification solely based on the economic criteria established in Article 13(1)(a).
• Article 13(1)(b) only provides for the calculation of the economic damages suffered by the claimant. The Supreme Court also considers that it might be possible to deem the method established in Article 13(1)(b) as compatible with the compensation of the moral prejudice if Article 13(1)(b) must be understood as the minimum level of compensation – on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation. Therefore, and in light of the compensatory spirit of Article 13 of the Directive, the Supreme Court understands that Article 13(1)(b) might be applied in addition to the compensation for moral prejudice.

The Supreme Court goes on to emphasise the controversial nature of the debate by referral to other Member States whose implementing national laws allow them to combine Article 13(1)(b) with (a) and the separate claim for moral prejudice.

Finally, it should be noted that the Spanish courts’ interpretation on the matter has rather leant towards considering Article 13(1)(b) as a full alternative to Article 13(1)(a). Moral prejudice has usually been considered as a complement to the heads of damage set out in Article 13(1)(a).